It’s been said that in business, failing to plan is planning to fail.
I’m not sure anyone deliberately sets out to plan their company’s failure, but not knowing a bit about your marketplace before you launch a business or a new product/service is certainly going to hinder you.
You’ll need to know, for example, whether the market’s ready for what you’re selling; is there existing demand, or are you going to have to work hard to create it? And if a product or service like yours has already been brought to market by someone else, how can you make sure customers buy it from you, rather than from your competitors?
What you need is a unique selling point, or “USP” – that certain something that makes you stand out from your competitors. But it’s not always immediately obvious what your USP might be, so it’s worth doing some marketing planning and analysis before you launch your product, to find out what your competitors are doing and – just as important – what they’re not.
In this article I’m going to show you how I created a competitor analysis for debbidoo, but something you must bear in mind before undertaking your own is that your competitor analysis needs to be very specific to your products or services. Some of the areas I’ve analysed may not be appropriate to your line of business, so you should see this article as a guide, rather than as an exact science (for example, I focus quite a lot on the Internet, but of course the Web may not play much of a part in your business model).
Who are your competitors?
To start with, you need to work out who your competitors are. Depending on the nature of your business and its target audience, there are a number of tools you can use to do this, including online directories, physical phone books and search engines.
Once you know who your competitors are, make a note of their web addresses and visit each website to get an overview of the products and services offered.
Draw up a spreadsheet to help you make a quick note of the products/services offered by your competitors. In the example below, I listed all the services I planned to offer, then identified the competitors that also offered those services. I also wanted to know if any of my competitors sent newsletters to their own customers, so I added in a column for this too.
What the spreadsheet showed me was that although the majority of competitors seemed to offer traditional marketing services, there was no evidence to suggest that any were providing e-marketing services, so there appeared to be an opportunity for a new entrant offering a combination of the two.
Once you’ve completed your quick comparison spreadsheet, you need to start looking at each competitor in a bit more detail.
Again, the areas you analyse will vary depending on the market you’re entering, but as a guide these are the areas I covered with debbidoo’s competitor analysis.
- Competitor’s website: what are your first impressions? Is it easy to use/navigate? Is the site well optimised for search engines? Is the copy well-written? How much information is available? Is the site standards-compliant? Is the brand communicated effectively and consistently? Take a screenshot of the website’s home page and include it in your report.
- Company background: how long has the company been established? Who started the company? Did it start life doing one thing, then change later, or has it always provided the same type of products and services?
- Company status: is it a registered company? If so, what is the registration number, SIC code, date of incorporation etc? Is it part of a group? If you have the budget for obtaining copies of company accounts (for example, from Companies House) then do so; these will help you understand how successful your competitors have been and may also help you work out your projected revenue once your business or product has launched.
- People: who owns the company? Who works there? Do they have any relevant qualifications? What is their background/experience?
- Contact details: include address, email, phone etc.
- SWOT analysis: what are the company’s strengths, weaknesses, opportunities and threats? How do these relate to your business idea?
- Brand strategy: is there a brand manual available to website visitors? If so, summarise it here. If not, you’ll have to take a guess – what do you think the company is trying to communicate? Is this achieved? If not, why not? Who is the competitor targeting? I found through this section of my competitor analysis that one of my competitors only worked with very large customers, while I was more interested in working with small to medium organisations; I was therefore able to discount this competitor early on.
- Promotional activities: finding out about your competitors’ offline promotional activities might be tricky, unless you subscribe to a lot of magazines or you’re aware that the competitor advertises on TV, radio, outdoor media etc. However, you can include any evidence you’ve found on search engines of online promotional activities; for example, press releases, listings in online directories, micro-sites, social networking, blogs etc. Does your competitor have a lot of inbound links? Where from? You can also find out whether your competitor is advertising using AdWords by entering the URL of their website at keywordspy.com.
- Customer service: I ‘mystery shopped’ my competitors, sending them all an email asking for prices for specific projects and then measuring the speed and quality/tone of their responses. However, that was before the introduction of the Consumer Protection from Unfair Trading Regulations, under which some forms of mystery shopping are no longer legal. If in doubt, check the Office of Fair Trading website.
- Services offered: explain the services or products provided by the competitor. Once you’ve looked at them in more detail, it may turn out that they’re not really competitors, so it’s worth including this section.
- Pricing: none of my competitors indicated their prices on their websites, so I could only get this information by mystery shopping them. Again though, this could now be considered extremely dodgy so do make sure you’re acting within the law before you mystery shop your competitors.
- Key customers, partners and other relationships: this is helpful if you’re providing B2B products/services. If you’re targeting consumers, use this section to profile the consumers your competitors are targeting (for example by age, gender, income etc) rather than listing specific customers.
Using your findings
Once you’ve analysed every competitor, read through your report and look for patterns and opportunities.
For example, in debbidoo’s case I spotted that no competitors advertised their prices, no competitors seemed to offer e-marketing services, none seemed to have a blog, none were using AdWords to advertise their services, and only one communicated with customers via an email newsletter. I therefore saw that one of the key points of my competitive strategy would be to provide complete honesty and transparency in my pricing: unlike any of my competitors, I list all my prices on my website so that customers don’t need to faff about phoning me up for information that they should by rights be able to get anonymously. I also saw that because none of my competitors were using blogs or AdWords, and only one was sending newsletters, opportunities existed for me to communicate with customers in a way that my competitors do not.
The information you’ve collated in your competitor analysis should help you build a competitive strategy and find your USP (for example, to offer the lowest prices, or to have the best customer service, etc). Your competitive strategy should then be written into your marketing plan (I’ll cover marketing plans in more detail another time).
Remember, too, that your competitor analysis – like your marketing plan – should be reviewed and revised periodically. Chances are your competitors will be introducing new products, having sales, changing their pricing structure, moving to new (larger?) premises – so you need to keep abreast of such changes and tweak your strategies occasionally to make sure you’re not being left behind.